Report: AT&T admits T-Mobile deal is unlikely

Erica, 19th December 2011

AT&T might finally realize it's time to wake up and smell the coffee - the carrier has reportedly been stepping down its efforts to push the T-Mobile buyout deal through.
In its arsenal of ideas to convince the government and regulators that absorbing T-Mobile would not give it monopolistic characteristics, AT&T had thought of selling off a bunch of T-Mobile assets to a third party.

That third party, AT&T would contend, would be big enough to fill the void that would be left in a world without T-Mobile, resulting in there still being four "major carriers."

AT&T has been in discussions with Leap Wireless, a small regional carrier that could have reached the entire country through the AT&T proposition, as well as Dish Network, which saw it as an opportunity to step into the mobile space.

But according to a report from Slashgear.com, AT&T has realized that even if it were to go through with such a deal, it's still unlikely it would be able to meet regulatory standards.

Now, it looks like the company will instead be going with "plan B," which does not involve a takeover of T-Mobile but still uses them as a strategic partner.

By creating a joint venture, AT&T would be able to tap into T-Mobile's coveted spectrum in the US, but it would still be competing against T-Mobile over which customers are using that spectrum.

Of course, under the original AT&T-T-Mobile buyout contract, AT&T said it would pay T-Mobile around $4 billion in cash and assets if regulators failed to approve the deal - a concession fee for ultimately wasting T-Mobile's time and hampering the company's ability to expand.

Even if the joint venture deal were to go through, AT&T might still be on the hook for that payout amount.